Bang for bucks: Best and worst Obamacare exchanges

The nearest part of the U.S. mainland to Hawaii is California—but the Aloha State couldn't be farther away from the Golden State when it comes to getting the most out of federal money to enroll people in Obamacare.

Hawaii's Obamacare exchange, which has been allocated more than $205 million in federal funds, had signed up just 5,744 people in private insurance plans as of last Friday—the lowest enrollment tally in the nation.

That works out to $35,749 in allocated federal dollars per private plan enrollee—making the Hawaii Health Connector the least efficient state-run exchange by that metric as well.

The Covered California exchange, on the other hand, has enrolled more than 1 million people in private insurance plans after being allocated $1.06 billion in federal funds—for an average dollar allocation of $1,046 per enrollee. That makes California the most efficient state-run exchange, according to CNBC.com's analysis that divided the total federal dollars allocated by private plan enrollees.

While that yawning gap between the two states is striking, there are also wide differences between the 13 other states running their own Obamacare exchanges.

Exchanges in New York and Washington state, for example, each have an average dollar allocation per enrollee of less than $1,400.

But two of their respective neighbors—Massachusetts and Oregon—have averages of $6,832 and $6,044, respectively.

And the Washington, D.C., exchange, which ranked as the second least efficient, has a whopping average of $20,449 per enrollee. That's $13,588 more than the third least efficient state by that metric, Vermont.

Sanjay Singh, CEO of hCentive, a health insurance tech company that was involved in building exchanges for New York, Colorado and Kentucky, said that the question of why some states "are doing worse than others is almost independent of the dollar amounts they took."

Instead, Singh said, it is more a function of variables including their management structure and the vendors they used to build the exchange.

But with the close of Obamacare's open enrollment on Monday, these variations and large dollar amounts are raising questions of whether many states that opted to run their own exchanges would have seen better results—and spent less taxpayer money—if they had let the federally run HealthCare.gov exchange handle that job. HealthCare.gov is doing just that for 36 other states.

In all, about $3.87 billion in federal money was allocated to the 15 exchanges run by the states and the District of Columbia, for an average of $1,899 per private plan enrollee so far.

While the average does not take into account enrollments for people newly eligible for government-run Medicaid programs by those exchanges, the analysis gives a snapshot of the exchanges' relative successes to date.

"Just obscene amounts of money have disappeared into these state exchanges for very little actual performance," said Phil Kerpen, president of the free market advocacy nonprofit group American Commitment. "You just have this huge duplication and waste in places like Hawaii and Oregon."

"How does a state like Vermont spend as much money as it did?" Kerpen said. That small state has been allocated $168 million in federal funds, with an average per enrollee of $6,911.

Lambrix did note that Hawaii has allowed previously insured people to keep their health plans through 2016, which "cuts into a significant portion of the [exchange's] market share for enrollment in 2014 [Affordable Care Act] plans."

He also pointed out that Hawaii has "historically had one of the lowest uninsured populations in the country, mostly due to the Prepaid Health Care Act of 1974 that requires employers to provide generous coverage for their employees."

Lambrix did not address the question of why Hawaii sought so much in federal grants for its exchange if its uninsured rate was low to begin with.

Linda Wharton Boyd, spokeswoman for Washington, D.C.'s exchange, said that despite having signed up just 6,516 people in private health plans—one of the lowest tallies in the nation—"I think we're doing exceptionally well."

"We're satisfied with our overall enrollment, we've done a yeoman's job," said Boyd, who noted that in addition to the private plans, the exchange has signed up another 11,383 people in Medicaid, and 12,000 people in small-business SHOP insurance.

Source: Covered California

Covered California webpage

But when asked about why her exchange's per private plan enrollee average was so much higher than all but Hawaii's, Boyd suggested it related to "the cost of things in D.C.," and then predicted the average cost would decrease with future sign-ups.

"I'm not going to fall in that trap," Boyd chuckled, when pressed to explain the difference between her exchange and others.

Covered California spokesman Larry Hicks, when asked about the state's top ranking for efficiency, said, "We've been good stewards of the public trust, maximizing federal dollars efficiently to bring affordable and quality health insurance plans to millions of Californians."

He also noted the state's average would have been much lower if the more than 1 million people deemed eligible for the state's version of Medicaid were factored in.

Michael Marchand, spokesman for Washington state's marketplace, the third most efficient exchange, attributed the exchange's efficacy to the fact that many of its officials have experience in the private sector, and "we look at the exchange like we're a start-up company."

"We were very targeted, and very focused on what we have to deliver, and we didn't vary far from that," Marchand said.

While some states have significantly lower average grants per enrollee than other states, American Commitment's Kerpen argued it would be more cost-effective to have HealthCare.gov handle enrollments for most, if not all of the country.

Kerpen said that proponents of the Affordable Care Act, for "purely political reasons," wanted state-run exchanges so that there would be a sense of ownership and control on the individual level of Obamacare markets, avoiding the impression that it was purely a federally imposed program.

"But there's no logic to it," Kerpen said. He added that federal regulations controlling the sale of Obamacare plans leave little room for individual states to customize their exchanges in ways that make them better at marketing plans to residents than the federal exchange has been.

Before the botched launch of HealthCare.gov, which had hundreds of software bugs that took two months to fix, there was speculation that a number of states which were using that federal exchange would eventually seek to build their own insurance marketplaces, and possibly do a better job at signing up their own residents.

But the fact that many other individual state exchanges also stumbled after their Oct. 1 launch—coupled with the fact that HealthCare.gov's sign-up features were largely fixed and enrolling more people than all the state exchanges combined—has killed such speculation, said Singh, the CEO of hCentive.

"I think the idea of building a new exchange from scratch, a new exchange, that will not happen," said Singh.

He said states whose own exchanges have struggled will either try to fix their platforms, switch to technologies used by successful exchanges like that of Connecticut or "they will use HealthCare.gov."

In fact, it was reported over the weekend that Maryland's floundering health exchange was moving to purchase the software model used by Connecticut.

—Additional reporting by Jodi Gralnick

And earlier version of this story contained the incorrect national average for federal dollars allocated per enrollee. It has been corrected.